PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2007 and 2006 Expressed in millions of Rupiah, unless otherwise stated
119
53. CUSTODIAL AND TRUST OPERATIONS continued
Custodial Operations continued e. As direct participant of Euroclear for customer who is conducting investment and securities
transactions settlement listed in overseas market and recorded in Euroclear Operations Centre, Brussels;
f. Securities lending as services for customers who want to maximize their investment return by lending their securities to securities companies through intermediary and guarantee by PT Kliring Penjaminan
Efek Indonesia. Bank Mandiri has 370 and 337 custodial customers as of December 31, 2007 and 2006, respectively. The
customers are primarily pension funds, insurance companies, banks, institution, securities companies, mutual funds and other private companies with a total portfolio value as of December 31, 2007 of
Rp90,072,761, JPY672,222,222 full amount and US439,473,200 full amount and as of December 31, 2006 of Rp73,596,884 and US395,383,869.08 full amount.
Bank Mandiri carries insurance on custodial services against safekeeping and transit loss in accordance with Capital Market Supervisory Agency and financial institutions’ regulation.
Trust Operations Bank Mandiri had been rendering trustee services since 1983. The operating license for trustee services
was renewed and re-registered with Bapepam as stipulated in Decision Letter No. 17STTD-WAPM1999 dated October 27, 1999. The Trustee Services Business TSB provides a full range of the following
services:
a. Trustee for bonds MTN b. Escrow Account Agent
c. Paying Agent d. Initial Public OfferingIPO Receiving Bank
e. Security Agent
Bank Mandiri as Trustee has 37 and 30 trustee customers as of December 31, 2007 and 2006 with the total value of bonds and MTN issued amounted to Rp13,686,607 and US100,000,000 full amount and
Rp9,852,386 and US100,000,000 full amount, respectively. While the sinking fund, escrow account and third party fund managed amounted to Rp448,816 on behalf of 17 customers and Rp50,461 on behalf of 8
customers as of December 31, 2007 and 2006, respectively.
Both Bank Mandiri Trust and Custodial Services have received Quality Certification ISO 9001:2000.
54. CHANNELING LOANS
Channeling loans based on sources of funds and economic sectors are as follows:
2007 2006
Government: Electricity, gas and water
7,602,067 8,349,541
Transportation and communications 3,915,733
4,185,230 Agriculture
1,249,057 1,307,609
Manufacturing 742,653
769,286 Mining
12,612 36,266
Construction 11,394
14,084 Others
95,338 102,055
13,628,854 14,764,071
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2007 and 2006 Expressed in millions of Rupiah, unless otherwise stated
120
54. CHANNELING LOANS continued
Bank Mandiri has been appointed to administer channeling loans in various foreign currencies received by the Government of Indonesia from various bilateral and multilateral financing institutions for financing
government projects through BUMN, BUMD and Pemda, such as, Overseas Economic Cooperation Fund, Protocol France, International Bank for Reconstruction and Development, Asian Development Bank, The
Swiss Confederation 30.09.1985, Kreditanstalt Fur Wiederaufbau, Banque Paribas, IGGI, Nederland Urban Sector Loan De Nederlanse Inveseringsbank voor Ontwikkelingslanden NV, Swiss Government,
Banque Français Credit National, US EXPORT IMPORT BANK, RYOSIN INT’L LTD, HKG, AUSTRIA, Swiss Banks Consortium 16.12.1994, The European Investment Bank, West Merchant Bank Ltd,
Sumisho, Fuyo, LTCB, Orix Sinco, Export Finance And Insurance Corporation EFIC Australia, Japan Bank for International Cooperation, Calyon BNP Paribas, BNP Paribas CAI, BELGIA,
MEESPIERSON N.V. Netherland 14.07.1994, French Government. Channeling loans are not recognized in the consolidated balance sheets as the credit risk is not borne by
the Bank or its Subsidiaries. Bank Mandiri’s responsibilities under the above arrangements include, among others, collections from borrowers and payments to the Government of principal, interest and
other charges and the maintenance of loan documentation. As compensation, Bank Mandiri receives bank fee which varies from 0.15 - 0.40 of the interest paid from the borrowers and 0.50 from the
average loan balance in one year.
55. RISK MANAGEMENT The risk management is designed for the Bank to be able to take corrective actions and adjust the risk
appetite. Risk management involves portfolio composition management with balanced risk and return that is performed to cope the rapid banking industry development showed by the increasing banking business
activities risk complexity. The Bank’s risk management is conducted based on Bank Indonesia’s Regulations regarding the
Implementation of Risk Management for Commercial Banking No. 58PBI2003 dated May 19, 2003 and Circular Letter No. 521DPNP dated September 29, 2003 regarding Implementation of Risk Management
for Banks. The Bank Indonesia’s regulation is intended for the Basel II Accord implementation requirement so that
banks in Indonesia are able to implement Basel II requirement in 2011. The Bank is implementing Basel II and related regulations in stages, starting with basic approach till complex approach implemented
comprehensively on three major banking risk: credit risk, market risk and operational risk. The implementation of Basel II - Pillar 1 regarding minimum capital including market risk, credit risk and
operational risk with basic approach is estimated to be implemented in the end of 2008. Whilst Pillar 2, for the other risks, is planned to be implemented in the early 2009 and Pillar 3 in the mid 2011.
The ideal risk management implementation including risk management activities identification - measurement - mitigation - monitoring on all levels till transactions level is in align with Basel II which is
also require internal risk management development on each transactions. Referring to the Basel II, the Bank finally performed risk management frame work systematically and repetitively so that risks managed
by the Bank were well monitored, thus risk management should also contributed as business enabler so that the business grows within the prudential banking corridor.
Both Basel II and Bank Indonesia’s regulation require active supervisory review from Bank management on risk management activities. In compliance with the requirement, the Bank has established Risk
Management Committee and Risk Management Unit which is intended to support integrated, measurable and controlled risk management.
